Kosmos Energy said Friday it has closed the previously announced transaction with B.V. Dordtsche Petroleum Maatschappij, a wholly-owned subsidiary of Royal Dutch Shell PLC (LSE: RDSA), to farm down interests in Suriname, Sao Tome & Principe and Namibia for approximately $95 million, plus future contingent payments of up to $100 million.
The transfer of interests in South Africa is expected to take place in 2021.
Andrew G. Inglis, Kosmos Energy’s Chairman and Chief Executive Officer said, “We are pleased to complete this transaction with Shell on schedule. The proceeds enable Kosmos to strengthen the balance sheet while accelerating high graded exploration opportunities in proven basins. The contingent payments locked into the agreement with Shell ensure we retain upside from frontier exploration with no further investment.”
Kosmos has allocated up to one-third of the initial proceeds for two high-quality infrastructure-led exploration prospects in the Gulf of Mexico, each offering hub scale potential with a low-cost, lower-carbon development scheme. The first test on the Winterfell prospect is currently drilling with results expected early next year. The company expects to use the remainder of the proceeds to reduce borrowings outstanding under its credit facilities.
Post completion of the transaction, Kosmos retains a focused exploration portfolio with over six billion barrels of gross resource potential in proven basins in West Africa and the Gulf of Mexico.
In October of 2018, Kosmos Energy had announced that it was abandoning the Pontoenoe-1 well offshore Suriname at Block 42 after failing to find oil. This was the second dry well in a row that the company drilled in the South American country. Kosmos had also come up dry in June 2018 at the Anapai-1A well in Block 45.
